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Percentage
Percentage
value of
of items
annual usage
Close day
Class A items About 20% About 80% to day
control
Regular
Class B items About 30% About 15%
review
Class C Infrequent
About 50% About 5%
items review
Example 1
Percentage
Percentage
value of
of items
annual usage
Close day
Class A items About 20% About 80% to day
control
Regular
Class B items About 30% About 15%
review
Infrequent
Class C items About 50% About 5%
review
Step 1
Total cost per year: Unit cost * total cost per year
Step 2
Results of calculation
Percentage of Percentage
Cathegory Items Action
items usage (%)
Percentage of Percentage of
Cathegory
items usage
ABC
Inventory management
policies
1 75 80
2 150,000 0,9
3 500 3,0
4 18,000 0,20
5 3,000 0,30
6 20,000 0,10
7 10,000 2
Step 1
1 75 80 6,000
7 10,000 2 20,000
1 75 80 6,000 3,51%
Percentage in
Item Cumulative Annual Usage Cumulative
Unit value total usage
number % of items quantity used per year % of total
(%)
Percentage Percentage of
Cathegory Items Action
of items usage (%)
Class A Close
2 15% 79,8%
items control
Class B Regular
7, 1 30% 15,31%
items review
Class C Infreque
3, 4, 5, 6 55% 4,89%
items nt review
Conclusion
The boundary between class A and
class B might not be as sharply defined;
The purpose of this classification is to
ensure that purchasing staff use
resources to maximum efficiency by
concentrating on those items that have
the greatest potential savings
selective control will be more effective
than an approach that treats all items
identically.